Strategic Openings in the Social Media and Networking: Introduction

The title of this post is part of our strategic analysis to help position a new site that will launch in February 2007. A great opportunity exists for entrepreneurs and developers of technology capabilities is to conduct “deep-dive” analysis. This analysis is deep but not necessarily time consuming.

I have joined almost two dozen social networking sites over the last five years, and I can tell you that they tend to follow the same formula. Instead, these sites do not solve a compelling business problem that exists within a larger context. For example, let’s take big media companies travails. The fundamental business problem is this:

How do large portals such as the Big 4 Yahoo, AOL, MSN, Google) and big media remain relevant and profitable with nomadic consumers who want stuff their way?

Before funding an idea, come up with a viable and legitimate business problem and clearly articulate how you will solve it. The market opportunity is the $97 billion of annual spend for advertising through traditional media. MySpace, my favorite site to compare is a very temporary solution to this, and most media companies have figured this out. They realize that Rupert Murdoch will likely dump this before U.S. legislators develop some sort of ratings system–aka “E” for everyone. In good conscience, we all know that MySpace does not meet this criteria. But unfortunately, sex sells–to some degree. Actually, it receives a lot of clicks and page views, but that’s where it starts and ends. Next time, we will get deeper into the discussion to outline how to design and develop a relevant, high-potential offering to solve the problem of big media.